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TMI Blog2017 (10) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... opriate not to add any amount and the same has been approved in Reshma Kumari. Judicial notice can be taken of the fact that salary does not remain the same. When a person is in a permanent job, there is always an enhancement due to one reason or the other. To lay down as a thumb rule that there will be no addition after 50 years will be an unacceptable concept. We are disposed to think, there should be an addition of 15% if the deceased is between the age of 50 to 60 years and there should be no addition thereafter. Similarly, in case of selfemployed or person on fixed salary, the addition should be 10% between the age of 50 to 60 years. The aforesaid yardstick has been fixed so that there can be consistency in the approach by the tribunals and the courts. In view of the aforesaid analysis, we proceed to record our conclusions:- (i) The two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a larger Bench as it was taking a different view than what has been stated in Sarla Verma, a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench. (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Civil) Nos. 29520-29521 of 2016 Special Leave Petition (Civil) No. 35679 of 2016 Special Leave Petition (Civil) No. 34237 of 2016 Special Leave Petition (Civil) No. 36072 of 2016 Special Leave Petition (Civil) No. 35371 of 2016 Special Leave Petition (Civil) No. 34395 of 2016 Special Leave Petition (Civil) No. 36027 of 2016 Special Leave Petition (Civil) No. 8306 of 2017 Special Leave Petition (Civil) No. 37617 of 2016 Special Leave Petition (Civil) No. 7241 of 2017 Civil Appeal No.12046 of 2017 Special Leave Petition (Civil) No. 17436 of 2017 Civil Appeal No. 8611 of 2017 CJI. Dipak Misra, J. A. K. Sikri, J A. M. Khanwilkar, J Dr. D. Y. Chandrachud And J. Ashok Bhushan JUDGMENT Dipak Misra, CJI. Perceiving cleavage of opinion between Reshma Kumari and others v. Madan Mohan and another (2013 ) 9 SCC 65 and Rajesh and others v. Rajbir Singh and others (2013) 9 SCC 54, both three-Judge Bench decisions, a two-Judge Bench of this Court in National Insurance Company Limited v. Pushpa and others (2015) 9 SCC 166 thought it appropriate to refer the matter to a larger Bench for an authoritative pronouncement, and that is how the matters have been placed before us. 2. In the course of del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of interest would go up. In India it does not happen. It, therefore, may be a relevant factor which may be taken into consideration for determining the actual ground reality. No hard-and-fast rule, however, can be laid down therefor. 48. A large number of English decisions have been placed before us by Mr Nanda to contend that inflation may not be taken into consideration at all. While the reasonings adopted by the English courts and its decisions may not be of much dispute, we cannot blindly follow the same ignoring ground realities. 49. We have noticed the precedents operating in the field as also the rival contentions raised before us by the learned counsel for the parties with a view to show that law is required to be laid down in clearer terms. 4. In the said case, the Court considered the common questions that arose for consideration. They are:- (1) Whether the multiplier specified in the Second Schedule appended to the Act should be scrupulously applied in all the cases? (2) Whether for determination of the multiplicand, the Act provides for any criterion, particularly as regards determination of future prospects? 5. Analyzing further the rationale in determining the laws u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the age group to which the victim belonged. Thus, under this Schedule the maximum multiplier can be up to 18 and not 16 as was held in Susamma Thomas (1994) 2 SCC 176 case. 18. We must at once point out that the calculation of compensation and the amount worked out in the Schedule suffer from several defects. For example, in Item 1 for a victim aged 15 years, the multiplier is shown to be 15 years and the multiplicand is shown to be ₹ 3000. The total should be 3000 15 = 45,000 but the same is worked out at ₹ 60,000. Similarly, in the second item the multiplier is 16 and the annual income is ₹ 9000; the total should have been ₹ 1,44,000 but is shown to be ₹ 1,71,000. To put it briefly, the Table abounds in such mistakes. Neither the tribunals nor the courts can go by the ready reckoner. It can only be used as a guide. Besides, the selection of multiplier cannot in all cases be solely dependent on the age of the deceased. For example, if the deceased, a bachelor, dies at the age of 45 and his dependants are his parents, age of the parents would also be relevant in the choice of the multiplier. But these mistakes are limited to actual calculations onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e multiplier shall be used in a given case in the following manner:- 42. We therefore hold that the multiplier to be used should be as mentioned in Column (4) of the Table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years); reduced by one unit for every five years, that is, M-17 for 26 to 30 years, M- 16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 years, then reduced by two units for every five years, that is, M-11 for 51 to 55 years, M-9 for 56 to 60 years, M-7 for 61 to 65 years and M-5 for 66 to 70 years. 11. After elaborately analyzing what has been stated in Sarla Verma (supra), the three-Judge Bench referred to the language employed in Section 168 of the Act which uses the expression just . Elucidating the said term, the Court held that it conveys that the amount so determined is fair, reasonable and equitable by accepted legal standard and not on forensic lottery. The Court observed just compensation does not mean perfect or absolute compensation and the concept of just compensation principle requires examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication has been made under Section 166, the multiplier as indicated in Column (4) of the Table in Sarla Verma should be followed. This is how the first question the Court had posed stood answered. 13. With regard to the addition of income for future prospects, this Court in Reshma Kumari (supra) adverted to Para 24 of the Sarla Verma s case and held:- 39. The standardisation of addition to income for future prospects shall help in achieving certainty in arriving at appropriate compensation. We approve the method that an addition of 50% of actual salary be made to the actual salary income of the deceased towards future prospects where the deceased had a permanent job and was below 40 years and the addition should be only 30% if the age of the deceased was 40 to 50 years and no addition should be made where the age of the deceased is more than 50 years. Where the annual income is in the taxable range, the actual salary shall mean actual salary less tax. In the cases where the deceased was selfemployed or was on a fixed salary without provision for annual increments, the actual income at the time of death without any addition to income for future prospects will be appropriate. A depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rupees one lakh. 17. Although the wages/income of those employed in unorganised sectors has not registered a corresponding increase and has not kept pace with the increase in the salaries of the government employees and those employed in private sectors, but it cannot be denied that there has been incremental enhancement in the income of those who are self-employed and even those engaged on daily basis, monthly basis or even seasonal basis. We can take judicial notice of the fact that with a view to meet the challenges posed by high cost of living, the persons falling in the latter category periodically increase the cost of their labour. In this context, it may be useful to give an example of a tailor who earns his livelihood by stitching clothes. If the cost of living increases and the prices of essentials go up, it is but natural for him to increase the cost of his labour. So will be the cases of ordinary skilled and unskilled labour like barber, blacksmith, cobbler, mason, etc. 18. Therefore, we do not think that while making the observations in the last three lines of para 24 of Sarla Verma judgment, the Court had intended to lay down an absolute rule that there will be no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted the said principle on the basis of judgments of this Court rendered in Union of India v. Godfrey Philips India Ltd. (1985) 4 SCC 369 , Sundarjas Kanyalal Bhatija v. Collector, Thane, Maharashtra (1989) 3 SCC 396 and Tribhovandas Purshottamdas Thakkar v. Ratilal Motilal Patel AIR 1968 SC 372 . It may be noted here that the Constitution Bench in Madras Bar Association v. Union of India and another (2015) 8 SCC 583 has clearly stated that the prior Constitution Bench judgment in Union of India v. Madras Bar Association (2010) 11 SCC 1 is a binding precedent. Be it clarified, the issues that were put to rest in the earlier Constitution Bench judgment were treated as precedents by latter Constitution Bench. 19. In this regard, we may refer to a passage from Jaisri Sahu v. Rajdewan Dubey AIR 1962 SC 83:- 11. Law will be bereft of all its utility if it should be thrown into a state of uncertainty by reason of conflicting decisions, and it is therefore desirable that in case of difference of opinion, the question should be authoritatively settled. It sometimes happens that an earlier decision given by a Bench is not brought to the notice of a Bench hearing the same question, and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id case, the Constitution Bench was dealing with a situation where the two-Judge Bench disagreeing with the three-Judge Bench decision directed the matter to be placed before a larger Bench of five Judges of this Court. In that scenario, the Constitution Bench stated:- 6. In our view, judicial discipline and propriety demands that a Bench of two learned Judges should follow a decision of a Bench of three learned Judges. But if a Bench of two learned Judges concludes that an earlier judgment of three learned Judges is so very incorrect that in no circumstances can it be followed, the proper course for it to adopt is to refer the matter before it to a Bench of three learned Judges setting out, as has been done here, the reasons why it could not agree with the earlier judgment. 22. In Chandra Prakash and others v. State of U.P. and another (2002) 4 SCC 234, another Constitution Bench dealing with the concept of precedents stated thus:- 22. The doctrine of binding precedent is of utmost importance in the administration of our judicial system. It promotes certainty and consistency in judicial decisions. Judicial consistency promotes confidence in the system, therefore, there is this nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down in Sarla Verma case and to make it applicable also to the self-employed and persons on fixed wages, it is clarified that the increase in the case of those groups is not 30% always; it will also have a reference to the age. In other words, in the case of self-employed or persons with fixed wages, in case, the deceased victim was below 40 years, there must be an addition of 50% to the actual income of the deceased while computing future prospects. Needless to say that the actual income should be income after paying the tax, if any. Addition should be 30% in case the deceased was in the age group of 40 to 50 years. 9. In Sarla Verma case, it has been stated that in the case of those above 50 years, there shall be no addition. Having regard to the fact that in the case of those self-employed or on fixed wages, where there is normally no age of superannuation, we are of the view that it will only be just and equitable to provide an addition of 15% in the case where the victim is between the age group of 50 to 60 years so as to make the compensation just, equitable, fair and reasonable. There shall normally be no addition thereafter. 27. At this juncture, it is necessitous to ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no scintilla of doubt that an earlier decision of co-equal Bench binds the Bench of same strength. Though the judgment in Rajesh s case was delivered on a later date, it had not apprised itself of the law stated in Reshma Kumari (supra) but had been guided by Santosh Devi (supra). We have no hesitation that it is not a binding precedent on the co-equal Bench. 31. At this stage, a detailed analysis of Sarla Verma (supra) is necessary. In the said case, the Court recapitulated the relevant principles relating to assessment of compensation in case of death and also took note of the fact that there had been considerable variation and inconsistency in the decision for Courts and Tribunals on account of adopting the method stated in Nance v. British Columbia Electric Railway Co. Ltd. 1951 SC 601 : (1951) 2 All ER 448 (PC) and the method in Davies v. Powell Duffryn Associated Collieries Ltd. 1942 AC 601 : (1942) 1 All ER 657 (HL). It also analysed the difference between the considerations of the two different methods by this Court in Susamma Thomas (supra) wherein preference was given to Davies method to the Nance method. Various paragraphs from Susamma Thomas (supra) and Trilok Chandra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ances. 33. Though we have devoted some space in analyzing the precedential value of the judgments, that is not the thrust of the controversy. We are required to keenly dwell upon the heart of the issue that emerges for consideration. The seminal controversy before us relates to the issue where the deceased was self-employed or was a person on fixed salary without provision for annual increment, etc., what should be the addition as regards the future prospects. In Sarla Verma, the Court has made it as a rule that 50% of actual salary could be added if the deceased had a permanent job and if the age of the deceased is between 40 50 years and no addition to be made if the deceased was more than 50 years. It is further ruled that where deceased was self-employed or had a fixed salary (without provision for annual increment, etc.) the Courts will usually take only the actual income at the time of death and the departure is permissible only in rare and exceptional cases involving special circumstances. 34. First, we shall deal with the reasoning of straitjacket demarcation between the permanent employed persons within the taxable range and the other category where deceased was self-emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f it is conceded that the said view is correct, extension of the said principle to some of the self-employed persons will be absolutely unjustified and untenable. Learned counsel for the insurers further contended that the view expressed in Rajesh (supra) being not a precedent has to be overruled and the methodology stood in Sarla Verma (supra) should be accepted. 37. On behalf of the claimants, emphasis is laid on the concept of just compensation and what should be included within the ambit of just compensation . Learned counsel have emphasized on Davies method and urged that the grant of pecuniary advantage is bound to be included in the future pecuniary benefit. It has also been put forth that in right to receive just compensation under the statute, when the method of standardization has been conceived and applied, there cannot be any discrimination between the person salaried or self-employed. It is highlighted that if evidence is not required to be adduced in one category of cases, there is no necessity to compel the other category to adduce evidence to establish the foundation for addition of future prospects. 38. Stress is laid on reasonable expectation of pecuniary benefits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses of the bachelor and 50% as the contribution to the family. However, where the family of the bachelor is large and dependent on the income of the deceased, as in a case where he has a widowed mother and large number of younger nonearning sisters or brothers, his personal and living expenses may be restricted to one-third and contribution to the family will be taken as two-third. 40. In Reshma Kumari, the three-Judge Bench agreed with the multiplier determined in Sarla Verma and eventually held that the advantage of the Table prepared in Sarla Verma is that uniformity and consistency in selection of multiplier can be achieved. It has observed:- 35. The assessment of extent of dependency depends on examination of the unique situation of the individual case. Valuing the dependency or the multiplicand is to some extent an arithmetical exercise. The multiplicand is normally based on the net annual value of the dependency on the date of the deceased s death. Once the net annual loss (multiplicand) is assessed, taking into account the age of the deceased, such amount is to be multiplied by a multiplier to arrive at the loss of dependency. 41. In Reshma Kumari, the three-Judge Bench, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment in Sarla Verma subject to the observations made by us in para 41 above. 43. On a perusal of the analysis made in Sarla Verma which has been reconsidered in Reshma Kumari, we think it appropriate to state that as far as the guidance provided for appropriate deduction for personal and living expenses is concerned, the tribunals and courts should be guided by conclusion 43.6 of Reshma Kumari. We concur with the same as we have no hesitation in approving the method provided therein. 44. As far as the multiplier is concerned, the claims tribunal and the Courts shall be guided by Step 2 that finds place in paragraph 19 of Sarla Verma read with paragraph 42 of the said judgment. For the sake of completeness, paragraph 42 is extracted below :- 42. We therefore hold that the multiplier to be used should be as mentioned in Column (4) of the table above (prepared by applying Susamma Thomas, Trilok Chandra and Charlie), which starts with an operative multiplier of 18 (for the age groups of 15 to 20 and 21 to 25 years), reduced by one unit for every five years, that is M-17 for 26 to 30 years, M- 16 for 31 to 35 years, M-15 for 36 to 40 years, M-14 for 41 to 45 years, and M-13 for 46 to 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of estate, loss of consortium and funeral expenses. In Santosh Devi (supra), the two-Judge Bench followed the traditional method and granted ₹ 5,000/- for transportation of the body, ₹ 10,000/- as funeral expenses and ₹ 10,000/- as regards the loss of consortium. In Sarla Verma, the Court granted ₹ 5,000/- under the head of loss of estate, ₹ 5,000/- towards funeral expenses and ₹ 10,000/- towards loss of Consortium. In Rajesh, the Court granted ₹ 1,00,000/- towards loss of consortium and ₹ 25,000/- towards funeral expenses. It also granted ₹ 1,00,000/- towards loss of care and guidance for minor children. The Court enhanced the same on the principle that a formula framed to achieve uniformity and consistency on a socio-economic issue has to be contrasted from a legal principle and ought to be periodically revisited as has been held in Santosh Devi (supra). On the principle of revisit, it fixed different amount on conventional heads. What weighed with the Court is factum of inflation and the price index. It has also been moved by the concept of loss of consortium. We are inclined to think so, for what it states in that regard. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utlined above:- (i) Funeral expenses - ₹ 2,000/- (ii) Loss of Consortium, if beneficiary is the spouse ₹ 5,000/- (iii) Loss of Estate - ₹ 2,500/- (iv) Medical Expenses actual expenses incurred before death supported by bills/vouchers but not exceeding ₹ 15,000/- 52. On a perusal of various decisions of this Court, it is manifest that the Second Schedule has not been followed starting from the decision in Trilok Chandra (supra) and there has been no amendment to the same. The conventional damage amount needs to be appositely determined. As we notice, in different cases different amounts have been granted. A sum of ₹ 1,00,000/- was granted towards consortium in Rajesh. The justification for grant of consortium, as we find from Rajesh, is founded on the observation as we have reproduced hereinbefore. 53. On the aforesaid basis, the Court has revisited the practice of awarding compensation under conventional heads. 54. As far as the conventional heads are concerned, we find it difficult to agree with the view expressed in Rajesh. It has granted ₹ 25,000/- towards funeral expenses, ₹ 1,00,000/- loss of consortium and ₹ 1,00,000/- towards l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up of 15 to 60 years so as to make the compensation just, equitable, fair and reasonable. This addition has been made in respect of self-employed or engaged on fixed wages. 57. Section 168 of the Act deals with the concept of just compensation and the same has to be determined on the foundation of fairness, reasonableness and equitability on acceptable legal standard because such determination can never be in arithmetical exactitude. It can never be perfect. The aim is to achieve an acceptable degree of proximity to arithmetical precision on the basis of materials brought on record in an individual case. The conception of just compensation has to be viewed through the prism of fairness, reasonableness and nonviolation of the principle of equitability. In a case of death, the legal heirs of the claimants cannot expect a windfall. Simultaneously, the compensation granted cannot be an apology for compensation. It cannot be a pittance. Though the discretion vested in the tribunal is quite wide, yet it is obligatory on the part of the tribunal to be guided by the expression, that is, just compensation . The determination has to be on the foundation of evidence brought on record as regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that the legal representatives of a deceased who was on a fixed salary would not be entitled to the benefit of future prospects for the purpose of computation of compensation would be inapposite. It is because the criterion of distinction between the two in that event would be certainty on the one hand and staticness on the other. One may perceive that the comparative measure is certainty on the one hand and uncertainty on the other but such a perception is fallacious. It is because the price rise does affect a self-employed person; and that apart there is always an incessant effort to enhance one s income for sustenance. The purchasing capacity of a salaried person on permanent job when increases because of grant of increments and pay revision or for some other change in service conditions, there is always a competing attitude in the private sector to enhance the salary to get better efficiency from the employees. Similarly, a person who is self-employed is bound to garner his resources and raise his charges/fees so that he can live with same facilities. To have the perception that he is likely to remain static and his income to remain stagnant is contrary to the fundamental c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... courts. 61. In view of the aforesaid analysis, we proceed to record our conclusions:- (i) The two-Judge Bench in Santosh Devi should have been well advised to refer the matter to a larger Bench as it was taking a different view than what has been stated in Sarla Verma, a judgment by a coordinate Bench. It is because a coordinate Bench of the same strength cannot take a contrary view than what has been held by another coordinate Bench. (ii) As Rajesh has not taken note of the decision in Reshma Kumari, which was delivered at earlier point of time, the decision in Rajesh is not a binding precedent. (iii) While determining the income, an addition of 50% of actual salary to the income of the deceased towards future prospects, where the deceased had a permanent job and was below the age of 40 years, should be made. The addition should be 30%, if the age of the deceased was between 40 to 50 years. In case the deceased was between the age of 50 to 60 years, the addition should be 15%. Actual salary should be read as actual salary less tax. (iv) In case the deceased was self-employed or on a fixed salary, an addition of 40% of the established income should be the warrant where the decease ..... X X X X Extracts X X X X X X X X Extracts X X X X
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